Domestic

New legislation will require motorists to provide driver number when taking out motor insurance

From 31 March 2025, motorists will be required to provide their driver number, and that of any named driver, in order to take out motor insurance policies. This requirement will be brought in under new legislation, for which the Minister for Transport, Eamon Ryan, signed Commencement Orders on 6 November 2024.

Insurers and intermediaries must ensure that driver numbers are collected and validated against the Department of Transport’s National Vehicle and Driver File before issuing a motor insurance policy. Insurers may apply to the Department of Transport for access to the driver number validation service and, once approved, must sign up to a data sharing agreement. This new requirement is intended to reduce the number of uninsured drivers on Irish roads, a step towards improving road safety.

European

Solvency II and IRRD: Council signs off new rules for the insurance sector

On 5 November 2024, the European Council adopted the Directive amending Solvency II and the Insurance recovery and resolution directive (IRRD). In its press release, the Council noted that the new rules on Solvency II aim to improve the role of the (re)insurance sector in providing long-term private sources of investments to European businesses. Meanwhile the IRRD seeks to enable insurers and regulators in the EU to respond to when (re)insurers experience severe financial distress. Both directives enter into force 20 days after being published in the EU’s Official Journal and the rules begin to apply two years after their entry into force.

EIOPA - increase in green investments in European insurers’ portfolios

At the start of this month, the European Insurance and Occupational Pensions Authority (EIOPA) published a factsheet on green investments by insurers in 2024. EIOPA stated that the insurance groups it analysed together have total investments totalling €8tn. The factsheet shows that the share of green investments in the portfolios of EEA insurers has edged higher. EIOPA's analysis focused on the extent to which European insurers’ direct equity and corporate bonds investments in the EEA align with the EU taxonomy for environmentally sustainable activities (the taxonomy).

Key findings include:

• 4.5% of insurers’ direct corporate bond and equity investments are currently aligned with the taxonomy.
• When considering only non-financial exposures, the share of taxonomy-aligned investments rises to 10.7%, up from 5.7% in 2022.
• An additional 20.5% of direct corporate bond and equity investments (or 48.6% of non-financial exposures) are in sectors eligible for the taxonomy.

International agreement on new global capital standard for insurers welcomed by EIOPA

On 14 November 2024, the International Association of Insurance Supervisors (the IAIS) announced its approval of the final version of the global Insurance Capital Standard (the ICS) as a prescribed capital requirement for internationally active insurance groups (IAIGs). The ICS aims to provide a globally comparable risk-based measure of capital adequacy of IAIGs, creating a common language for supervisory discussions on group solvency and enhancing global convergence amongst group capital standards. Once adopted, it will form the quantitative element of the Common Framework for the Supervision of IAIGs. The ICS accepts many features of the Solvency II framework, including market-adjusted valuation, risk-based capital requirements and the use of internal models. Welcoming the approval, EIOPA stated that the ICS was a “significant step toward global consistency in the regulation and supervision of IAIGs”.

The agreed ICS will be presented for adoption at the IAIS Annual General Meeting on 5 December 2024.

EIOPA consults on mass-lapse reinsurance and reinsurance termination clauses to enhance guidance on risk mitigation techniques

EIOPA recently launched a consultation on the addition of two annexes to its 2021 opinion on the use of risk mitigation techniques by insurance undertakings. The deadline for providing feedback is 7 February 2025.

The first proposed annex gives further guidance to supervisors on the treatment of mass-lapse reinsurance, promoting greater supervisory convergence across Europe in the context of evolving risk mitigation methods through the use of reinsurance. The second proposed annex deals with specific terms of reinsurance agreements' termination clauses that could compromise the effective transfer of risk.

Solvency II: EIOPA publishes final report on prudential treatment of sustainability risks

EIOPA published its final report on the prudential treatment of sustainability risks within Solvency II on 7 November 2024. The report recommends additional capital requirements for fossil fuel assets on European insurers’ balance sheets to accurately reflect the high risks of these assets. The findings of this report stem from:

1. a risk-based analysis of evidence and data
2. feedback from EIOPA’s discussion paper on methodologies and data sources
3. a public consultation on preliminary findings and policy proposals

The report covers three distinct areas:

1. the market risk of assets exposed to the climate transition
2. the impact of climate risk-related prevention measures on non-life underwriting risks
3. the treatment of social risks

Letter from EIOPA to the European Commission - EIOPA's views on a proposal for better data sharing legislation

EIOPA has written to the European Commission in support of the proposed regulation, 2023/0363 (COD) (the Regulation). The Regulation aims to streamline reporting frameworks under certain financial services and investment support regulations and facilitate more efficient data sharing between authorities. EIOPA shared several observations, noting that (a) the scope of information and the conditions for sharing data were not clearly defined under the Regulation as drafted, and (b) the Regulation needed clarity on coverage, governance and resourcing of the single integrated reporting system that it is intended to facilitate. EIOPA also highlighted that the Regulation should not lead to an excessive burden on authorities sharing data, nor should it result in the creation of new databases/dataflows. Rather, it should build on existing ones.

EIOPA publishes monthly technical information for Solvency II relevant risk-free interest rate term structures and monthly update of the symmetric adjustment of the equity capital charge

EIOPA published its monthly technical information on 6 November 2024 in relation to the relevant risk-free interest rate term structures with reference to the end of October 2024, for Solvency II purposes. This information is used for the calculation of technical provisions for (re)insurance obligations, and its monthly publication ensures that the calculation of technical provisions across Europe is consistent. EIOPA also published technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of October 2024.

EIOPA releases its opinion on the scope of DORA in light of the review of the Solvency II framework

EIOPA published an opinion on the impact of increased size thresholds as part of the Solvency II Review on insurance undertakings in scope of the Digital Operational Resilience Act (DORA) on 14 November 2024. The opinion calls on the European Commission to make legislative changes so that DORA does not temporarily apply to “small insurers” where they meet the requirements of the current Solvency II Directive for “small insurers” but do not meet the updated requirements under the revised Solvency II Directive. A legislative gap means that such insurers would need to comply with DORA from 17 January 2025 until late 2026, when the revised Solvency II directive begins to apply. In its Opinion, EIOPA observes that the temporary application of DORA would impose unnecessary cost and administrative burden on small insurers without significantly fulfilling DORA’s objectives.

EIOPA consultation on a blueprint for an awareness tool for natural catastrophe risks and prevention measures

EIOPA launched a consultation on 28 November 2024 on its proposal for the development of a natural catastrophes tool.

This tool aims to help homeowners to better understand the potential impacts of climate change on their properties, the importance of adequate insurance coverage, and the risk prevention measures that are available. It is EIOPA’s view that raising awareness will help to lessen the insurance protection gap for natural catastrophes in the EU and strengthen society’s long-term resilience against climate change.

The deadline for providing feedback on this consultation is 28 February 2025.

For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.

This publication provides an overview of certain legal and regulatory developments that may be of interest to certain entities. It does not purport to provide analysis of law or legal advice and is strictly for information purposes only.